Michaela Whitbourn

The Australian Competition and Consumer Commission is investigating two of crooked former Labor minister Eddie Obeid's sons over their involvement in a tender process for a coal exploration licence over the family's Bylong Valley farm.

The consumer watchdog confirmed on Friday that it is investigating Moses Obeid and Paul Obeid over allegations of cartel conduct, where businesses secretly agree to act together instead of competing with each other.

The two men are seeking to challenge compulsory examination notices issued by the ACCC, which would compel them to co-operate with the watchdog's investigations by handing over documents and giving evidence in private. Their lawyers will appear in court later on Friday in a bid to set aside the notices.

"These examinations are part of the ACCC’s investigation into allegations of cartel conduct regarding the 2009 tender process conducted by the NSW Department of Trade and Investment (formerly the Department of Primary Industries) for an exploration mining licence over the Mount Penny coal tenement in the Bylong Valley," the commission said in a statement.

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"The ACCC’s investigation follows the report made by the NSW Independent Commission Against Corruption in Operation Jasper concerning the above tender process. The notices require each of Paul and Moses Obeid to attend the ACCC offices, give evidence and produce documents in private examinations.

"Lawyers acting for Paul and Moses Obeid seek a declaration from the Federal Court that the notices are invalid. The ACCC considers that the notices are valid and were properly issued, and consequently is opposing the application by Paul and Moses Obeid.

"As this matter is before the Federal Court and subject to further investigation, the ACCC has no further comment at this time."

In a report released last year, the ICAC found Eddie Obeid and Moses Obeid had entered into a corrupt agreement with then Labor mining minister Ian Macdonald in 2009 to create a coal tenement over the family's farm, Cherrydale Park, in the Bylong Valley near Mudgee.

There was also evidence before the commission that Mr Macdonald gave the family inside information about companies which would compete in the tender for a coal exploration licence over the property. The Obeids entered into a mining joint venture with the successful bidder, Cascade Coal.

Five of Cascade Coal's current and former directors were found to have acted corruptly by concealing from authorities the involvement of the Obeids in the coal venture.

A person who is found to have been part of a criminal cartel can be sent to jail for up to 10 years.